BUS311_chapter_07

2 statute of frauds 2 201 description of goods will

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Unformatted text preview: t, although the parties would be wise to include as much detail as possible, so as to avoid misunderstandings later. However, a writing that states the quantity and rog80328_07_c07_134-156.indd 144 10/26/12 5:52 PM CHAPTER 7 Section 7.2 Statute of Frauds (§ 2-201) description of goods will be sufficient, even though it leaves out important terms such as price, shipment, and quality of the goods to be sold, as long as these terms can be reasonably established. There are four situations in which oral contracts for the sale of goods for $500 or more will be enforceable despite the statute of frauds. The exceptions to the statute of frauds requirement of a writing involve: 1. 2. 3. 4. specially manufactured goods; admissions in pleadings as to the existence of an oral contract; partially performed contracts; and, between two merchants, the confirming memo exception. Let’s take a look at each of these more closely. An oral contract involving specially manufactured goods that are not suitable for sale in the normal course of business is enforceable once substantial steps have been taken by the seller toward performance of the contract. This is to protect the seller from incurring undue costs and burden without compensation. Example 7.18. On the telephone, Issa orders 125 polo shirts for her work force from Quality Clothes, at a price of $20 per shirt. The shirts are to be embroidered with Issa’s logo. Quality has done 50 shirts when Issa tries to cancel the order. The contract is binding without a written document. The second exception concerns admissions in pleadings. If a party to an oral contract for goods worth $500 or more admits to entering into an oral contract in pleadings or in testimony in open court, the contract will be enforceable to the extent that it is admitted. Example 7.19. Buyer orally agrees to buy ten paintings from seller at $10,000 each, but subsequently changes his mind. When he is sued by the seller for breach of contract, he testifies in open court that he had agreed to buy two of the paintings for $10,000, but that he doesn’t have to because the contract was an oral one. Buyer is now obligated to buy the paintings, because of his admission, but only the two that he has admitted buying in his testimony. Master baker Buddy Valastro of the TLC show Cake Boss shows off a cake that would definitely qualify as specially manufactured goods. Sean M. Fitzgerald/Associated Press rog80328_07_c07_134-156.indd 145 This exception leads to a lot of people in Buyer’s situation instead testifying that they have no memory of agreeing to anything like that, thus avoiding the exception and possible perjury charges for lying under oath. 10/26/12 5:52 PM Section 7.3 Modification of the Sales Contract CHAPTER 7 The third exception concerns partially performed contracts. A buyer’s acceptance of goods ordered under an oral contract is binding, but only as to the goods actually accepted by the buyer. Example 7.20. Buyer orders by telephone from seller five Oriental rugs at a price of $2,000 each. When the first...
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This test prep was uploaded on 04/09/2014 for the course BUS 311 taught by Professor Parker during the Spring '10 term at Ashford University.

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